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| Nifty may revisit its recent high |
| B G Shirsat / Mumbai Aug 14, 2009, 00:42 IST |
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The Nifty today saw a gap-up opening after the Federal Reserve said on Wednesday that interest rates in the US would remain low, even though it expressed optimism about the economic outlook.
The broader index extended gains in early afternoon trade and closed above 4,600 on fresh long build-up. Today’s close of 4,605 is considerably higher than the immediate breakout level of 4,520. This means the index can revisit its recent high of 4,731 and move up further thereafter.
The trading volume in index futures and index options declined by over 200,000 contracts each, indicating that traders were wary of taking short positions when the index started trading above 4,550. Banking, realty, auto and metal stocks surged. Reliance Industries (RIL) and ONGC gained from firm oil prices.
Nifty August futures closed at a premium to the spot and added an open interest (OI) of 2.89 million shares during the intraday trade. However, the August futures shed an OI of 1.26 million shares during the settlement period. The Bloomberg data suggested that traders covered their short positions during the morning session and retail traders booked profit when the index started trading above 4,575.
Traders were seen unwinding their short positions in the 4,600 and 4,700 strikes calls as they expected the Nifty to move up further in the near future. They were seen writing 4,500-4,600 puts as they expected the index to get support around 4,600 levels.
The Instanex FII index of 15 stocks underperformed the Nifty as the latter was largely driven by second-line stocks such as Wockhardt Pharma, IFCI, HDIL, JSW Steel and Sesa Goa. However, FII buying was seen in ICICI Bank, ITC, Larsen & Toubro and State Bank of India stocks.
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